Cenvat credit on employee and factory compliance services upheld where they had a direct nexus with manufacturing operations.

Cenvat credit was admissible on outdoor catering, gardening and landscaping, cleaning, and rent-a-cab services where the services were used to meet factory compliance requirements and support manufacturing operations. Outdoor catering related to statutory canteen facilities under the Factories Act, gardening and landscaping maintained the green belt in line with pollution control norms, cleaning kept the factory compliant as neat and dust-free, and rent-a-cab transported workers and employees to and from the factory. Because each service had a direct nexus with the business of manufacture and lawful continuation of operations, disallowance of credit on the ground of no nexus was unsustainable.

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Issues: Whether Cenvat credit was admissible on outdoor catering service, gardening and landscaping service, cleaning service, and rent-a-cab service used for employees and factory compliance.

Analysis: Outdoor catering was used to provide canteen facilities required under the Factories Act. Gardening and landscaping were undertaken to maintain the green belt and comply with pollution control norms. Cleaning services were used to keep the factory neat, clean, and dust free, which was also a statutory requirement. Rent-a-cab service was used to transport workers and employees to and from the factory. Since these services were required for lawful continuation of manufacturing operations and had a direct nexus with the business of manufacture, the denial of credit on the ground of absence of nexus was unsustainable.

Conclusion: Cenvat credit on all the disputed services was admissible and the disallowance was not sustainable.

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